Part 2: A Correctly Labeled PPC, and an Explanation of Opportunity Cost
Opportunity Cost and the Above PPC (Production Possibilities Curve)
The above PPC shows that the factory can produce - at any given time - 50 Bb Clarinets or 75 Eb Clarinets. Since this graph is comprised of a line and not simply two points, there is a possibility of combinations in between the defined maxima. To produce more of one clarinet variation (say, perhaps, an Eb Clarinet), then the factory must give up the production of some of the other variation (the Bb Clarinet). For example, the point (30,30) is defined as an easy place to show the opportunity cost. If the factory decides to produce 30 Bb Clarinets, then it must produce 30 Eb Clarinets, which is 45 less than the maximum production amount for Eb Clarinets. To produce any more Bb Clarinets, some amount of Eb Clarinets must be given up for the production of the Bb Clarinet; since 50 Bb Clarinets = 75 Bb Clarinets, simple division shows that one Bb Clarinet costs the factory the production of 1.5 Eb Clarinets because 75/50=3/2=1.5. Similarly, the point (10,60) shows that to produce 10 Bb Clarinets, the factory must produce 60 Eb Clarinets, which is 15 Eb Clarinets below the factory's maximum potential output. Likewise, to produce 1 more Eb Clarinet than previously, some Bb Clarinet production must be given up; since 75 Eb Clarinets = 50 Bb Clarinets, simple division mandates that .67 Bb Clarinets be given up (50/75=2/3=.67).
Part 2: A Correctly Labeled PPC, and an Explanation of Opportunity Cost
Opportunity Cost and the Above PPC (Production Possibilities Curve)
The above PPC shows that the factory can produce - at any given time - 50 Bb Clarinets or 75 Eb Clarinets. Since this graph is comprised of a line and not simply two points, there is a possibility of combinations in between the defined maxima. To produce more of one clarinet variation (say, perhaps, an Eb Clarinet), then the factory must give up the production of some of the other variation (the Bb Clarinet). For example, the point (30,30) is defined as an easy place to show the opportunity cost. If the factory decides to produce 30 Bb Clarinets, then it must produce 30 Eb Clarinets, which is 45 less than the maximum production amount for Eb Clarinets. To produce any more Bb Clarinets, some amount of Eb Clarinets must be given up for the production of the Bb Clarinet; since 50 Bb Clarinets = 75 Bb Clarinets, simple division shows that one Bb Clarinet costs the factory the production of 1.5 Eb Clarinets because 75/50=3/2=1.5. Similarly, the point (10,60) shows that to produce 10 Bb Clarinets, the factory must produce 60 Eb Clarinets, which is 15 Eb Clarinets below the factory's maximum potential output. Likewise, to produce 1 more Eb Clarinet than previously, some Bb Clarinet production must be given up; since 75 Eb Clarinets = 50 Bb Clarinets, simple division mandates that .67 Bb Clarinets be given up (50/75=2/3=.67).